In 2020, the number of registered mobile money accounts grew by 12.7 per cent globally, to 1.21 billion, according to the latest report from the GSM Association.
The GSMA noted that over 136 million accounts were added in the year, which exceeded last year’s forecasted growth rate by 6.4 percentage points.
In the 2021 State of the Industry Report on Mobile Money, the association revealed that transactions increased by 65 per cent and account activity grew by 17 per cent to over 300 million monthly active mobile money accounts.
Transaction values also grew across the board as more money circulated. For the first time, the global value of daily transactions exceeded $2bn dollars, and GSMA predicted it would surpass $3bn a day by the end of 2022.
The report said the growths were driven by the COVID-19 pandemic, as lockdown restrictions limited access to cash and financial institutions.
It also stated that the fastest growth was in markets where governments provided significant pandemic relief to their citizens.
As predicted in last year’s State of the Industry report, registered accounts in Africa comfortably surpassed the half billion mark at 562 million.
Sub-Saharan Africa remained at the forefront of the mobile money industry and accounted for the majority of growth. By the end of the year, there were 548 million registered accounts in the region, 159 million of which were active on a monthly basis and transaction volume of $490bn.
Although absolute growth was highest in West and East Africa, Southern Africa grew the fastest at 24 per cent year on year.
According to the report, the value of mobile money merchant payments grew by 43 per cent compared to 28 per cent in the previous year.
On average, $2.3bn in merchant payments were transacted per month in 2020, and Quick Response codes became the second-most offered channel for merchant payments after Unstructured Supplementary Service Data.
GSMA’s Chief Regulatory Officer, John Giusti, noted that mobile money was a powerful tool for expanding the financial inclusion of women in low- and middle-income countries.
He said however, across markets, women were still 33 per cent less likely than men to have a mobile money account.
“GSMA and its members are committed to closing this gender gap by addressing the barriers that prevent women from accessing and using mobile financial services,” Giusti said.
According to GSMA’s research, the mobile money ecosystem has been strengthened by an increasing number of strategic partnerships established between money transfer organisations and mobile money providers.
The research found that the pandemic gave fresh urgency to the need for regulatory change to facilitate greater digitalisation.
The report said, “In many markets, transaction limits were increased to allow more funds to flow through mobile money. Additionally, as demand rose for non-physical payments, some regulators classified mobile money agents and their supply chains as essential services.
“While some of the regulatory reforms made in response to the pandemic have been positive for customers and providers, the implementation and extension of fee waivers has had a negative impact on mobile money providers’ core revenue stream.”
GSMA emphasised that mobile money providers depended mainly on transactional revenues to sustain their business and encouraged regulators to work closely with the industry to ensure sustainability going forward.
Trove Reassures Customers Of Commitment To All Local Law And Regulations
Following the Securities and Exchange Commission (SEC) warning against the proliferation of unregistered online investment and trading platforms, Trove reassures customers of commitment to all the local laws and regulations.
In a statement released this evening, the CEO of Trove, Oluwatomi Solanke, said, “as communicated earlier, Trove strives to maintain good standing with all existing compliance requirements and regulatory frameworks.
“We are delighted to announce that Trove has taken the necessary steps to register with the Nigerian Securities & Exchange Commission (SEC) for the SEC recommended license and remains in active communication with the SEC.
“The SEC continues to be proactive in our nascent industry and we applaud the regulators for being very supportive of the technological developments and innovations in the space. Further, we are delighted that the SEC has been forthcoming in receiving our input as it builds a robust regulatory framework. We specifically would like to thank you for your patience over the past couple of weeks.”
He further affirmed that Trove will continue to work with the SEC to protect, educate and build investor confidence through our platforms, as we simplify investing and promote economic empowerment.
West Africa Launches New Payments Digitization Agenda
In Senegal, 8 out of 10 workers are paid in cash. Most are temporary workers and excluded from health insurance. A survey revealed that 77% of temporary workers would be willing to receive their wages digitally if this gave them access to health insurance. These are some of the major findings of the publication that the Senegalese government has launched today, with support from the Better Than Cash Alliance (United Nations), the World Bank and the National Agency of Statistics and Demography of Senegal. Combining digital payments with health insurance benefits offers an excellent opportunity for social inclusion, formalization, and financial innovation.
Digital payments stimulate domestic production and consumption. If 50% of temporary workers in Senegal received payments digitally, 45 billion CFA francs would be added to GDP per year (around $80 million USD). Paying workers digitally, speeds up the financial inclusion for the population, boosts business competitiveness and increases financial system liquidity. To tap into this potential, the SME Development Agency (ADEPME) plans to bolster its SME support fund with $20 million USD (around 11 billion CFA francs) from the World Bank. This will be used to strengthen SME digitization initiatives and support digital payment projects for workers.
High-level leadership speaks out in support of digital payments for workers
Senegalese President Macky Sall and H.M. Queen Máxima of the Netherlands, who serves as UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), have launched an appeal to fellow leaders, the private sector and civil society, inviting them to: “use this report to ensure digital payments are at the center of a sustainable and fair economic recovery. We look forward to jointly providing leadership on this agenda to achieve an inclusive and digitally enabled recovery,” the two leaders added.
To set an example, the President of Burkina Faso, Roch Marc Christian Kaboré, also decreed, in late 2020, the digitization of payments for workers in the administration of Burkina Faso. When the COVID crisis emerged, the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO) took decisions aimed at reducing the circulation of cash in the 8 countries. These actions have had tangible impacts which are beginning to change the lives of workers and companies.
Digitizing payments and advancing universal health care coverage
While receiving a salary is often linked to health care contributions, globally at least 61% of workers operate in the informal sector without adequate coverage, according to the International Labour Organization (ILO). Indeed, in some countries, there is not always a legal obligation for employers to contribute to any kind of coverage for their informal/self-employed workers, which affects women more than men.
To meet this challenge of inclusion, the National Agency for Universal Health Coverage in Senegal has launched an ambitious digital payments platform. It has partnered with fintechs and private companies to link access to universal health coverage and digital payments – specifically targeting women. Flagship national enterprises such as the agricultural giant SODAGRI or SMEs such as QUALIOCEAN and Kossam SDE are setting an example by providing temporary workers with universal health coverage. More than 200,000 workers will now have access to quality, government-subsidized health care.
While 81% of national companies have fewer than 20 employees, on average hundreds or even thousands of temporary workers are employed in their supply chains. Employees are generally banked, but 93% of employees on temporary contracts are paid in cash. The latter are systematically excluded from the formal health system.
The successful transition towards digital payments
Three obstacles have limited the growth of payment digitization in Africa: the size of the informal sector, sometimes up to 90% of the economy; the historically low financial inclusion rate; and most importantly, 21% of African workers receive a wage keeping them below the poverty line.
This has all changed dramatically. Financial inclusion has surged since 2010 with the arrival of electronic money issuers and fintech.
The country’s largest employer, Compagnie Sucrière Sénégalaise, has successfully digitized payment for around 8,000 workers via a partnership with local fintech. “We wanted to digitize payments without using the banking system, which isn’t suited to some populations,” noted Claude Fizaine, the company’s Secretary General, in an interview with an African media outlet. “For employers, the benefits of digitizing payments include avoiding the constraints of managing large amounts of cash, and all the risks that distribution can involve. It also makes it possible to offer employees tools tailored to their financial and family situations, which can only have a positive impact on their personal and professional lives,” he added.
WAEMU’s innovations should continue to inspire the rest of Africa. Since 2012, it has been the continent’s engine for economic growth and stability. The examples of Senegal and its neighbours reinforce the ILO’s global agenda that could well make digital payments for workers a new global standard for promoting decent work.
Global Investments into Fintech Companies Plunged by Almost 40% amid Pandemic
The year 2020 was a challenging year for many fintechs. The global slowdown in funding caused by the COVID-19 led to a significant drop in the number of venture capital deals and brought uncertainty for many companies operating in this market.
According to data presented by AksjeBloggen.com, global investments into fintech companies hit $105.3bn in 2020, almost a 40% plunge amid pandemic.
US Fintechs Raised 75% of Total Investments
Fintech companies apply modern tech solutions in the financial services industry to offer digitally enhanced products and allow widespread access to financial products at a lower cost than traditional players. Over the years, these innovative startups transformed how people and businesses spend, invest, save, or borrow money.
Even before the pandemic, many fintechs found it difficult to access funding, as investors focused on established companies instead of early-stage businesses. Nevertheless, the total value of investments into fintech companies increased dramatically in the last decade.
In 2010, fintechs raised $9bn in funding, revealed the KPMG’s 2020 Pulse of Fintech report. By 2015, this figure grew more than seven times to $67.1bn. In 2018, the total investment value jumped to $145.9bn and continued rising to $168bn in 2019, as the record year for fintech investments.
After the COVID-19 pandemic brought many deals to a halt in the first half of 2020, H2’20 reversed the trend as investors and fintechs learned to do business in a new normal. Nevertheless, statistics show that last year witnessed 2,861 deals worth $105.3bn, almost $63bn less than before the pandemic.
The Americas were the region attracting the most investments in the sector, accounting for 75% of the total, or $79.2bn. Fintechs from the EMEA region raised $14.4bn last year. Asian fintechs followed with $11.2bn worth of investments.
The Number of Fintech Startups Doubled Since 2019
Although the COVID-19 affected the investment activity in the fintech sector, it also triggered a surge in the use of fintech solutions, creating a huge space for new companies.
The BCG data revealed the number of fintech startups worldwide more than doubled since the pandemic struck, rising from over 12,200 in 2019 to almost 26,500 this month.
As of April 2021, there were 10,738 fintech startups in North America as the leading region, up from 5,800 in 2019.
However, statistics show Europe, the Middle East, and Africa have witnessed even more impressive growth in the number of fintechs. In 2019, almost 3,600 companies were operating in this sector. Since then, the number of fintech startups in the EMEA region surged by 160% to more than 9,300.
Asia and the Pacific ranked third with nearly 6,200 fintech startups as of April, up from 2,850 in 2019.
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